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Friday, September 7, 2012

the provisions of the Section 5 of the Limitation Act are applicable to the proceedings before DRAT under Section 18 of the SARFAESI Act. Consequently, the impugned order is set aside and the Debts Recovery Appellate Tribunal, Chennai is directed to consider the petitioner's application for condonation of delay afresh on merits and pass appropriate orders in accordance with law preferably within a period of two (2) months from the date of receipt of a copy of this order. The writ petition is accordingly allowed. As a sequel to the disposal of the writ petition, the miscellaneous applications, if any, shall stand disposed of as infructuous. There shall be no order as to costs.


THE HON'BLE THE ACTING CHIEF JUSTICE PINAKI CHANDRA GHOSE AND THE HONOURABLE  THE HONOURABLE SRI JUSTICE VILAS V. AFZULPURKAR                  

WRIT PETITION No.22317 of 2012  

04.09.2012

Smt Sajida Begum.

State Bank of India, SARC Nampally, Hyderabad, Rep. by its authorized officer.

Counsel for the Petitioner: MR. T.C. KRISHNAN

Counsel for the Respondent: MR. AMBADIPUDI SATYANARAYANA        

<GIST:

>HEAD NOTE:  

? Cases referred

1. AIR 2011 MP 205
2. (2011) 6 SCC 739
3. 2012 (7) TMI 641
4. 2008 (4) MHLJ 424 = LAWS (BOM) 2008 (2) 173  
5. (2004) 11 SCC 472
6. (2004) 11 SCC 456
7. (1975) 4 SCC 22
8. AIR 1995 SC 1111
9. (2003) 8 SCC 431
10. IV (2009) BC 635
11. (2008) 14 SCC 445
12.  (2009) 5 SCJ 774
13.  (1995) 5 SCC 5 = AIR 1995 SC 2272

ORDER: (per Hon'ble Sri Justice Vilas V. Afzulpurkar)


        Petitioner herein has challenged the order dated 04.05.2012 passed by the
Debts Recovery Appellate Tribunal (DRAT), Chennai dismissing the application
filed by the petitioner, being I.A.No.1654 of 2010 in AIR(SA).No.1012 of 2010.

2.      The aforesaid appeal and the interlocutory application were preferred
before DRAT against order of the Debts Recovery Tribunal-II (DRT), Hyderabad in
S.A.No.142 of 2010 dated 27.08.2010. In the said appeal before DRT, the
petitioner had questioned the possession taken over by the respondents with
regard to the secured asset i.e. house bearing No.18-12-419/941/A/1 situated at
Hafez Baba Nagar, Kanchan Bagh, Hyderabad.  Petitioner asserts that she is the
absolute owner and possessor of the said house property by virtue of a
registered gift deed dated 27.02.2009 executed by her husband, Mohd. Nazeer
Khan, whereas the respondent bank asserts that it is a secured asset, which was
mortgaged by Smt Khaiser Begum by depositing the registered Gift Deed dated
04.02.1995 executed by her husband Mohammed Arif Khan and the said mortgage was    
created in favour of the respondent bank on 14.11.1995 by virtue of term loan
and working capital limit availed by M/s. Bio Vet Formulations represented by
its proprietor, Sri Arif Khan. While we are not for the present concerned with
the merits of the rival claims, as above, S.A.No.142 of 2010 preferred by the
petitioner was, however, dismissed on merits by DRT under order dated 27.08.2010
and questioning the correctness of the said order, petitioner had preferred
further appeal before DRAT along with an application seeking condonation of
delay of 16 days in filing the said appeal. The application, being I.A.No.1654
of 2010, has since been dismissed by DRAT under the impugned order by placing
reliance upon a decision of the Madhya Pradesh High Court in SETH BANSHIDHAR    
KEDIA RICE MILLS PVT. LTD v. STATE BANK OF INDIA1 holding that under Section 18    
of the Securitization and Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002 the appellate tribunal has no power to condone the
delay in presentation of the appeal. The correctness of the said view is
questioned in this writ petition.

3.      We have heard the learned counsel for the petitioner and the learned
standing counsel appearing for the respondent bank.

4.      Learned counsel for the petitioner has placed reliance upon a decision of
the Supreme Court in THIRUMALAI CHEMICALS LTD. v. UNION OF INDIA2 and a Full      
Bench judgment of the High Court of Calcutta in UNION OF INDIA v. JAGADISH  
PRASAD JALAN NANDALAL3 to which one of us is a party (the Hon'ble the Acting  
Chief Justice). He also placed reliance upon a Division Bench judgment of the
Bombay High Court in UCO BANK, MUMBAI v. M/s. KANJI MANJI KOTHARI AND CO.4 and a          
decision of the Supreme Court in FAIRGROWTH INVESTMENTS LTD. v. CUSTODIAN5.        

5.      Per contra, learned standing counsel for the respondent bank placed
reliance upon a decision of the Supreme Court in L.S. SYNTHETICS LTD. v.
FAIRGROWTH FINANCIAL SERVICES LTD.6; THE COMMISSIONER OF SALES TAX, U.P.,                
LUCKNOW v.  
M/s. PARSON TOOLS AND PLANTS, KANPUR7; BIRLA CEMENT WORKS v. G.M. WESTERN                  
RAILWAYS8; PRAKASH H. JAIN v. MARIE FERNANDES9; a judgment of the Kerala High        
Court in JAYAN v. HONG KONG AND SHANGHAI BANKING CORPORATION LTD.10; NOHARLAL                
VERMA v. DISTRICT CO-OPERATIVE CENTRAL BANK LIMITED11 and lastly the decision of        
the Supreme Court in COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE v. HONGO INDIA              
P. LTD.12.

6.      Before we appreciate the rival contentions, the legislative environment
spread over the Securitization and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002
(for short 'SARFAESI Act'); the Recovery of Debts Due To Banks and Financial
Institutions Act, 1993 (for short 'the DRT Act') and the Limitation Act, 1963,
may be noticed so far as is relevant.  Section 17 of the SARFAESI Act provides a
forum for adjudication of claim of any person challenging any of the security
measures taken by the secured creditor and the said forum is provided before the
DRT constituted under the DRT Act.  For the sake of convenience and relevance,
Sections 17(1) and (7), 18(1) and (2), 36 and 37 of the SARFAESI Act are
extracted as under:

17. Right to Appeal. - (1) Any person (including borrower), aggrieved by any of
the measures referred to in sub-section (4) of section 13 taken by the secured
creditor or his authorised officer under this Chapter, may make an application
along with such fee, as may be prescribed, to the Debts Recovery Tribunal having
jurisdiction in the matter within forty-five days from the date on which such
measures had been taken.

(7) Save as otherwise provided in this Act, the Debts Recovery Tribunal shall,
as far as may be, dispose of application in accordance with the provisions of
the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of
1993) and the rules made thereunder.

18. Appeal to Appellate Tribunal. - (1) Any person aggrieved, by any order made
by the Debts Recovery Tribunal under Section 17, may prefer an appeal along with
such fee, as may be prescribed to an Appellate Tribunal within thirty days from
the date of receipt of the order of Debts Recovery Tribunal.

(2) Save as otherwise provided in this Act, the Appellate Tribunal shall, as far
as may be, dispose of the appeal in accordance with the provisions of the
Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993)
and rules made thereunder.

36. Limitation. - No secured creditor shall be entitled to take all or any of
the measures under sub-section (4) of section 13, unless his claim in respect of
the financial asset is made within the period of limitation prescribed under the
Limitation Act, 1963 (36 of 1963).

37. Application of other laws barred. - The provisions of this Act or the rules
made thereunder shall be in addition to, and not in derogation of, the Companies
Act, 1956 (1 of 1956), the Securities Contracts (Regulation) Act, 1956 (42 of
1956), the Securities and Exchange Board of India Act 1992 (15 of 1992), the
Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993)
or any other law for the time being in force.

        Though Section 17 of SARFAESI Act is styled as a right to appeal, it is,
in fact, a forum for original proceedings against the security measures.  Sub-
section (7) of Section 17 provides that any application made under Section 17 of
SARFAESI Act shall be disposed of in accordance with the provisions of the DRT
Act and the Rules made thereunder. Section 18 of SARFAESI Act provides a right
to appeal to DRAT against orders of DRT passed under Section 17 of SARFAESI Act.
Such appeal is also required to be disposed of in accordance with the provisions
of the DRT Act and the Rules made thereunder.

7.      The following provisions of the DRT Act may also be noticed.
The DRT and DRAT are established under Section 3(1) and 8(1) respectively and
the respective exclusive jurisdiction of the tribunal and the appellate tribunal
are provided for under Section 17 of the DRT Act. The procedure and powers of
tribunal and appellate tribunal are governed by Section 22 of the DRT Act, which
is extracted hereunder:
22. Procedures and powers of the Tribunal and the Appellate Tribunal. -
(1) The Tribunal and the Appellate Tribunal shall not be bound by the procedure
laid down by the Code of Civil Procedure, 1908
(5 of 1908), but shall be guided by the principles of natural justice and,
subject to the other provisions of this Act and of any rules, the Tribunal and
the Appellate Tribunal shall have powers to regulate their own procedure
including the places at which they shall have their sittings.

(2) The Tribunal and the Appellate Tribunal shall have, for the purposes of
discharging their functions under this At,
the same powers as are vested in a Civil Court under the Code of Civil
Procedure, 1908, (5 of 1908) while trying a suit, in respect of the following
matters, namely: -

(a) summoning and enforcing the attendance of any person and examining him on
oath;
(b) requiring the discovery and production of documents;
(c) receiving evidence on affidavits;
(d) issuing commissions for the examination of witnesses or documents;
(e) reviewing its decisions;
(f) dismissing an application for default or deciding it ex parte;
(g) setting aside any order of dismissal of any application for default or any
order passed by it ex parte;

(3) Any proceeding before the Tribunal or the Appellate Tribunal shall be deemed
to be a judicial proceeding within the meaning of Secs. 193 and 228, and for the
purposes of Sec.196 of the Indian Penal Code (45 of 1860) and the Tribunal or
the Appellate Tribunal shall be deemed to be a Civil Court for all the purposes
of Sec.195 and Chapter XXVI of the Code of Criminal Procedure, 1973 (2 of 1974).

        It would be noticed from the above that the tribunal and the appellate
tribunal while discharging their functions exercise same powers as are vested in
civil Court under the Code of Civil Procedure, 1908 while trying a suit in
respect of specified matters, as above.

8.      Section 24 of the DRT Act, extracted below, provides that the provisions
of the Limitation Act apply to an application made to the tribunal.
24. Limitation.- The provisions of the Limitation Act, 1963
(36 of 1963) shall, as far as may be, apply to an application made to a
Tribunal.

9.      Section 29 of the Limitation Act, to the extent relevant,
is necessary to be noticed as follows:
29. Savings:- (1) Nothing in this Act shall affect Section 25 of the Indian
Contract Act, 1872 (9 of 1872).

(2) Where any special or local law prescribes for any suit, appeal or
application a period of limitation different from the period prescribed by the
Schedule, the provisions of Section 3 shall apply as if such period were the
period prescribed by the Schedule and for the purpose of determining any period
of limitation prescribed for any suit, appeal or application by any special or
local law, the provisions contained in Sections 4 to 24 (inclusive) shall apply
in so far as, and to the extent to which, they are not expressly excluded by
such special or local law.


        As would be noticed from sub-clause (2) above that Sections 4 to 24
(inclusive) of the Limitation Act would apply to any special or local law, if
such special or local law does not expressly exclude the applicability of
Sections 4 to 24 of the Limitation Act.

10.     The interpretation of Section 29 of the Limitation Act is considered in
several decisions and it would be apt to notice a decision of the Supreme Court
in MUKRI GOPALAN v. CHEPPILAT PUTHANPURAYIL ABOOBACKER13 wherein the question              
that fell for consideration is whether the appellate authority constituted under
Section 18 of the Kerala Rent Control Act has power to condone the delay and
whether Sections 4 to 24 of the Limitation Act are applicable thereto, which
includes Section 5 of the Limitation Act. Paras 10, 11, 13, 15 and 22 are
relevant for our purpose and are extracted hereunder:
10. In the light of the aforesaid analysis of the relevant clauses of Section
29(2) of the Limitation Act, let us see whether Section 18 of the Rent Act
providing for a statutory appeal to the appellate authority satisfies the
aforesaid twin conditions for attracting the applicability of Section 29(2) of
the Limitation Act. It cannot be disputed that Kerala Rent Act is a special Act
or a local law. It also cannot be disputed that it prescribes for appeal under
Section 18 a period of limitation which is different from the period prescribed
by the schedule as the schedule to the Limitation Act does not contemplate any
period of limitation for filing appeal before the appellate authority under
Section 18 of the Rent Act or in other words it prescribes nil period of
limitation for such an appeal. It is now well settled that a situation wherein a
period of limitation is prescribed by a special or local law for an appeal or
application and for which there is no provision made in the Schedule to the Act,
the second condition for attracting Section 29(2) would get satisfied. As laid
down by a majority decision of the Constitution Bench of this court in the case
of Vidyacharan Shukla Vs. Khubchand Baghel and Ors.  
(AIR 1964 SC 1099), when the First Schedule of the Limitation Act prescribes no
time limit for a particular appeal, but the special law prescribes a time limit
for it, it can be said that under the first schedule of the Limitation Act all
appeals can be filed at any time, but the special law by limiting it provides
for a different period. While the former permits the filing of an appeal at any
time, the latter limits it to be filed within the prescribed period. It is
therefore, different from that prescribed in the former and thus Section 29(2)
would apply even to a case where a difference between the special law and
Limitation Act arose by the omission to provide for limitation to a particular
proceeding under the Limitation Act.

11. It is also obvious that once the aforesaid two conditions are satisfied
Section 29(2) on its own force will get attracted to appeals filed before
appellate authority under Section 18 of the Rent Act. When Section 29(2) applies
to appeals under Section 18 of the Rent Act, for computing the period of
limitation prescribed for appeals under that Section, all the provisions of
Sections 4 to 24 of the Limitation Act would apply. Section 5 being one of them
would therefore get attracted. It is also obvious that there is no express
exclusion anywhere in the Rent Act taking out the applicability of Section 5 of
the Limitation Act to appeals filed before appellate authority under Section 18
of the Act. Consequently, all the legal requirements for applicability of
Section 5 of the Limitation Act to such appeals in the light of Section 29(2) of
Limitation Act can be said to have been satisfied. That was the view taken by
the minority decision of the learned single Judge of Kerala High Court in Jokkim
Fernandez Vs. Amina Kunhi Umma (AIR 1974 KER 162). The majority did not agree on  
account of its wrong supposition that appellate authority functioning under
Section 18 of the Rent Act is a persona designata. Once that presumption is
found to be erroneous as discussed by us earlier, it becomes at once clear that
minority view in the said decision was the correct view and the majority view
was an erroneous view.

...

13. As per this sub-section, the provisions contained in certain sections of the
Limitation Act were applied automatically to determine the periods under the
special laws, and the provisions contained in other sections were stated to
apply only if they were not expressly excluded by the special law. The provision
(Section 5) relating to the power of the court to condone delay in preferring
appeals and making applications came under the latter category. So if the power
to condone delay contained in Section 5 had to be exercised by the appellate
body it had to be conferred by the special law. That is why we find in a number
of special laws a provision to the effect that the provision contained in
Section 5 of the Limitation Act shall apply to the proceeding under the special
law. The jurisdiction to entertain proceedings under the special laws is
sometimes given to the ordinary courts, and sometimes given to separate
tribunals constituted under the special law. When the special law provides that
the provision contained in Section 5 shall apply to the proceedings under it, it
is really a conferment of the power of the court under Section 5 to the
Tribunals under the special law-whether these tribunals are courts or not. If
these tribunals under the special law should be courts in the ordinary sense an
express extension of the provision contained in Section 5 of the Limitation Act
will become otiose in cases where the special law has created separate tribunals
to adjudicate the rights of parties arising under the special law. That is not
the intension of the legislature.


15. After repealing of Indian Limitation Act, 1908 and its replacement by the
present Limitation Act of 1963 a fundamental change was made in Section 29(2).
The present Section 29(2) as already extracted earlier clearly indicates that
once the requisite conditions for its applicability to given proceedings under
special or local law are attracted, the provisions contained in Sections 4 to 24
both inclusive would get attracted which obviously would bring in Section 5
which also shall apply to such proceedings unless applicability of any of the
aforesaid Sections of the Limitation Act is expressly excluded by such special
or local law. By this change it is not necessary to expressly state in a special
law that the provisions contained in Section 5 of the Limitation Act shall apply
to the determination of the periods under it. By the general provision contained
in Section 29(2) this provision is made applicable to the periods prescribed
under the special laws. An express mention in the special law is necessary only
for any exclusion. It is on this basis that when the new Rent Act was passed in
1965 the provision contained in old Section 31 was omitted. It becomes therefore
apparent that on a conjoint reading of Section 29(2) of Limitation Act of 1963
and Section 18 of the Rent Act of 1965, provisions of Section 5 would
automatically get attracted to those proceedings, as there is nothing in the
Rent Act of 1965 expressly excluding the applicability of Section 5 of the
Limitation Act to appeals under Section 18 of the Rent Act.
...

22. As a result of the aforesaid discussion it must be held that appellate
authority constituted under Section 18 of the Kerala Rent Act, 1965 functions as
a court and the period of limitation prescribed therein under Section 18
governing appeals by aggrieved parties will be computed keeping in view the
provisions of Sections 4 to 24 of the Limitation Act, 1963 such proceedings will
attract Section 29(2) of the Limitation Act and consequently Section 5 of the
Limitation Act would also be applicable to such proceedings. Appellate authority
will have ample jurisdiction to consider the question whether delay in filing
such appeals could be condoned on sufficient cause being made out by the
concerned applicant for the delay in filing such appeals. The decision rendered
by the High Court in the present case as well as by the appellate authority
taking contrary view are quashed and set aside. The proceedings are remanded to
the court of the appellate authority, that is, District Judge, Thalassery. Rent
Control Appeal No.9/94 filed before the said authority by the appellant is
restored to its file with a direction that the appellate authority shall
consider I.A.56/94 filed by the applicant for condonation of delay on its own
merits and then proceed further in accordance with law. Appeal is allowed
accordingly. In the facts and circumstances of the case there will be no order
as to costs.
(emphasis supplied)


11.     It is not in dispute that there is no express exclusion of the Limitation
Act under the SARFAESI Act and so far as DRT Act is concerned, under which the
DRT and DRAT function and entertain original and appellate proceedings under the
SARFAESI Act, clearly exercise powers of a civil Court under CPC and in
addition, the Limitation Act is expressly made applicable under Section 24 of
the DRT Act.

12.     In view of that, we are of the view that Section 29(2) of the Limitation
Act is clearly attracted and thereby Sections 4 to 24 (inclusive) of the
Limitation Act would be applicable to proceedings under Sections 17 and 18 of
the SARFAESI Act before the DRT as well as DRAT. Consequently, therefore, the
order impugned passed by the DRAT rejecting the petitioner's application for
condonation of delay for want of jurisdiction is liable to be set aside.

13.     The decision in SETH BANSHIDHAR KEDIA RICE MILLS PVT. LTD.'s case (1      
supra) which is the basis for passing of the impugned order by DRAT, with
respect, does not lay down correct law and as shown above is, in fact, contrary
to the ratio of the Supreme Court in MUKRI GOPALAN's case (13 supra) quoted
above. With respect, therefore, we are unable to subscribe to the view of the
Madhya Pradesh High Court in the aforesaid decision.

14.     Now coming to the decisions cited by the learned counsel for the
petitioner, the decision in THIRUMALAI CHEMICALS LTD's case  
(2 supra) is totally inapplicable to the present case, as it dealt with a case
under the Foreign Exchange Management Act, 1999 which provides power of appeal  
under Section 19(1); procedure for appeal under Section 19(2) and the power of
tribunal to condone the delay in filing of an appeal under proviso to Section
19(2). The question involved herein, therefore, did not arise in that case.
Similarly, the decision in JAGADISH PRASAD JALAN NANDALAL's case (3 supra) is    
also distinguishable, on facts, as in the said decision Section 35 of the FEMA
r/w Section 34 of the Arbitration and Conciliation Act, 1996, were considered
and Section 35, which provides the limitation of not exceeding 60 days, was held
indicative of exclusion of Section 5 of the Limitation Act in terms of Section 6
of the General Clauses Act.
In the decision in UCO BANK's case (4 supra), the aforesaid similar question was
considered and answered by holding that Section 5 of the Limitation Act would be
applicable to the appeal or application under Section 17(1) of the Act.  The
decision of the Supreme Court in FAIRGROWTH INVESTMENTS LTD's case (5 supra),      
which dealt with the provisions of the Special Court (Trial of Offences Relating
to Transactions in Securities) Act, 1992, is not applicable to the facts and
question of law arising in the present matter.

15.     The decision of the Supreme Court in L.S. SYNTHETICS LTD's case (6 supra)
relied upon by the learned counsel for the respondent bank is already considered
by the Supreme Court while considering the provisions of the Special Court
(Trial of Offences relating to Transactions in Securities) Act, referred to
supra and is distinguishable from the present case. The decision in THE
COMMISSIONER OF SALES TAX's case (7 supra) relates to applicability of Section  
14 of the Limitation Act and does not deal with the question involved herein.
Similarly, the decision in BIRLA CEMENT WORKS's case (8 supra) deals with the
question of applicability of the Limitation Act to the Railway Claims Tribunal,
which is, admittedly, not a civil Court; that case also has no application to
the present case. The decision in PRAKASH H. JAIN's case (9 supra) considered as
to whether the competent authority under the Maharashtra Rent Control Act, 1999
is not a civil Court and on holding so, consequently, Section 151 of CPC was
held not applicable. The decision of the Kerala High Court in JAYAN's case (10
supra) is clearly distinguishable, as it does not take into consideration
Section 29 of the Limitation Act or the decision of the Supreme Court in MUKRI
GOPALAN's case (13 supra). With respect, therefore, we express our inability to
agree with the said view. Similarly, the decision in NOHARLAL VERMA's case (11
supra) is also distinguishable as it considered, on facts, as to whether
sufficient cause was made out.
The last of the decisions in COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE's case          
(12 supra) considered the provisions of the Central Excise Act, 1944 wherein the
Act itself provided for the forum for appeal and revision etc. together with
power of the appellate and revisional authority to condone the delay for the
respective periods provided for appeal and revision. It was, on those
circumstances, held that no further power of condonation under Section 5 of the
Limitation Act is available. Obviously, that decision has no application to the
statutory environment in the present case.

16.     In the result, therefore, we hold that the provisions of the Section 5 of
the Limitation Act are applicable to the proceedings before DRAT under Section
18 of the SARFAESI Act. Consequently, the impugned order is set aside and the 
Debts Recovery Appellate Tribunal, Chennai is directed to consider the
petitioner's application for condonation of delay afresh on merits and pass
appropriate orders in accordance with law preferably within a period of two (2)
months from the date of receipt of a copy of this order.

        The writ petition is accordingly allowed. As a sequel to the disposal of
the writ petition, the miscellaneous applications, if any, shall stand disposed
of as infructuous. There shall be no order as to costs.
_________________________  
PINAKI CHANDRA GHOSE, ACJ      
_____________________  
VILAS V. AFZULPURKAR, J    

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